Monthly Archives: August 2009

Love them or hate them, the ACT party are in government and are clearly having an impact of the lives of New Zealander’s.

Recently Roger Douglas (one time Labour Party Minister of Finance) said that ”

He’s entitled” . Entitled to take a holiday in England at the tax payers expense. What really rubs me the wrong way is that at the same time he is part of National led Govt that has cut funding to adult education, has provided an insulting 1.9% increase to funding of early childhood education (still leaving it short of what is needed by many millions), to name but two.

Surely a government should be doing all it can to minimize the impact this recession is having on the workers of this country? To me that means not taking a hatchet to the number of public servants. It means buying some of the struggling businesses that employ so many people. It means investing in New Zealand, not letting MP’s gallivant around the world (Spouses in tow) at the tax payers expense.

And while I’m on the topic of the ACT party I have been thinking about their tax policy. If you read through it you will see that they talk about a flat tax rate, saying that it will lead to a fairer ta system. If I may digress for a moment. At the last election their candidates up and down the country talked about the tax take as a cake. They talked about how the cake is only so big and that their plan is to grow that cake so that when it is divied up, more can be spent in each section.

My problem with their analogy is that if you follow their recipe (flat taxes = everyone paying the same rate) you will get a horrible cake. For this blog, each ingredient represents the taxes paid by people on different income levels.

If you have ever made a cake you will know that you add different amounts of each ingredient. You would add (for example) 2 cups of flour, and perhaps a teaspoon of baking powder. However, if you were to use the amounts as dictated by a flat tax you would wind up with much more baking powder than you need. Your cake would taste awful.Not only that, it would not cook because there would be too much liquid (because you would add more that the cup of milk that a real recipe calls for).

If we are all paying the same rates of tax, we are all adding the same amounts to the tax take. Personally I would prefer to see everyone pay according to their ability to pay. This means that those on higher incomes can spare that little bit more in tax. It means those on lower incomes can keep in their pockets a bit more of their hard earned wages. It is also worth pointing out that those in the lower socio-economic demographics are more likely to spend their incomes on New Zealand made products, are more likely to take holidays in New Zealand. Any good economist will tell you that for an economy to grow and for people to keep their jobs (especially in a recession) you need people to spend money in New Zealand, not gallivant off overseas and spend money in another country. That does nothing for our economy except take money out of it.

To me, each according to their ability to pay is a much fairer way of doing things. Isn’t one of the things that makes New Zealand great the fact that we love to be fair on each other, to take care of each other? Or am I mistaken?